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Multiple-Choice Questions for inventory management

Quản lý nhà nước về đất đai và bất động sản (Đại học Kinh tế Quốc dân)

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Multiple-Choice Questions for inventory management

1. Bill is in charge of the inventory for Home Builder's Supply. As an inventory item gets
low, he is to restock the item by a quantity that minimizes the total inventory costs for that
item. What is this restocking quantity called?

A. short order quantity

B. refill unit quantity
C. economic order quantity
D. minimum stock level
E. re-order limit

2. Allison has developed a set of procedures for determining the amount of each raw
material that she needs to have in inventory if she is to keep her firm's assembly lines
operating efficiently. These procedures are commonly referred to by which one of the
following terms?

A. first-in, first-out method

B. the Baumol model
C. net working capital planning
D. economic order procedures
E. materials requirements planning

3. Which one of the following is a system for managing demand-dependent inventories that
minimizes the inventory levels of a firm?

A. just-in-time inventory
B. turnover planning
C. net working capital planning
D. inventory scoring
E. inventory ranking

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4. Which one of the following inventory items is probably the least liquid?

A. plywood held in inventory by a home builder

B. a wheel barrow held in inventory by a garden center
C. a partially assembled interior for a new vehicle
D. a set of tires owned by an automobile manufacturer
E. a toy owned by a retail toy store

5. Which one of the following inventory items is probably the most liquid?

A. a custom made set of kitchen cabinets

B. metal cabinets for dishwashers
C. wheat stored in a grain silo
D. a customized drilling press
E. a partially built modular home

6. Which one of the following inventory-related costs is considered a shortage cost?

A. storage costs
B. insurance cost
C. cost of safety reserves
D. obsolescence cost
E. opportunity cost of capital used for inventory purchases

7. The ABC approach to inventory management is based on the concept that:

A. inventory should arrive just in time to be used.

B. the inventory period should be constant for all inventory items.
C. basic inventory items that are essential to production and also inexpensive should be
ordered in small quantities only.
D. a small percentage of the inventory items probably represents a large percentage
of the inventory cost.
E. one-third of a year's inventory need should be on hand, another third should be on
order, and the last third should not be ordered yet.

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8. The EOQ model is designed to determine how much:

A. total inventory a firm needs in any one year.

B. total inventory costs will be for any one given year.
C. inventory should be purchased at a time.
D. inventory will be sold per day.
E. a firm loses in sales per day when an inventory item is depleted.

9. At the optimal order quantity size, the:

A. total cost of holding inventory is fully offset by the restocking costs.

B. carrying costs are equal to zero.
C. restocking costs are equal to zero.
D. total costs equal the carrying costs.
E. carrying costs equal the restocking costs.

10. The EOQ model is designed to minimize:

A. production costs.
B. inventory obsolescence.
C. the carrying costs of inventory.
D. the costs of replenishing inventory.
E. the total costs of holding inventory.

11. Which one of the following items is most likely a derived-demand inventory item?

A. cereal ready to be bagged and shipped to stores

B. tires held in inventory by an auto maker
C. shoes on display in a retail store
D. toys ready to be shipped to toy stores
E. wheat harvested by a farmer

12. Inventory needs under a derived-demand inventory system are:

A. primarily dependent upon the competitive demands placed on a firm's suppliers.

B. based on the anticipated demand for the finished product.
C. based on minimizing the cost of restocking inventory.
D. held constant over time.
E. determined by a kanban system.

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13. A just-in-time inventory system:

I. when implemented properly reduces the cost of inventory to zero.

II. increases the inventory turnover rate.
III. is sufficient to handle immediate production needs.
IV. minimizes the costs of holding inventory.

A. I and III
only
B. II and IV only
C. I, II, and IV only
D. II, III, and IV only
E. I, II, III, and IV

14. A firm sells 4,500 units of an item each year. The carrying cost per unit is $2.15 and the
fixed costs per order are $69. What is the economic order quantity?

A. 374 units
B. 421 units
C. 497 units
D. 537 units
E. 623 units

15. The best-selling pair of roller skates The Teen Store offers sells for $79.99 a pair. The
store consistently sells 5,700 pairs of these roller skates every year. The fixed costs to
order more skates is $68 and the carrying costs are $1.95 per pair. What is the economic
order quantity?

A. 446 pairs
B. 515 pairs
C. 529 pairs
D. 631 pairs
E. 648 pairs

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16. One of the best selling items L.T. Ten offers sells for $9.99 a unit. The variable cost per
unit is $6.38 and the carrying cost per unit is $1.12. The firm sells 6,500 of these units
each year. The fixed cost to order this item is $75. What is the economic order quantity?

A. 690 units
B. 747 units
C. 933 units
D. 1,157 units
E. 1,260 units

17. Each year you sell 950 units of a product at a price of $899 each. The variable cost per
unit is $575 and the carrying cost per unit is $16.90. You have been buying 100 units at a
time. Your fixed cost of ordering is $60. What is the economic order quantity?

A. 82 units
B. 95 units
C. 105 units
D. 113 units
E. 124 units

18. Cohen Industrial Products uses 2,100 switch assemblies per week and then reorders
another 2,100. The relevant carrying cost per switch assembly is $18, and the fixed order
cost is $300. What is the EOQ?

A. 1,279.84
B. 1,809.97
C. 1,907.88
D. 2,278.42
E. 2,698.15

19. Roger's Store begins each week with 150 phasers in stock. This stock is depleted each
week and reordered. The carrying cost per phaser is $48 per year and the fixed order cost
is $70. What is the optimal number of orders that should be placed each year?

A. 48.69
B. 51.71
C. 54.20
D. 61.10
E. 64.50

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